Driving e-Commerce Sales for America’s Favorite Giveaway Candy

May 12, 2020

Meet The Speakers

Jim Knight

Vice President of e-Commerce at Spangler Candy

Listen to the podcast

Here’s a glimpse of what you’ll learn:

Jim Knight talks about the Spangler Candy company and how it has evolved over the last 20 years
The biggest challenges posed by online channels like Amazon and the changes they’ve done in channel management
How the COVID-19 crisis has affected Spangler Candy and how they are coping
The role of branding in consumer behavior and Spangler Candy maintains their branding and reputation
What the company has learned about its customers during the current COVID-19 crisis
Jim shares how sales in Amazon impacted his business and how it differs from sales done through their website
How Jim handles reselling for other brands and dealing with competition
Challenges Jim faced in setting up his company’s Amazon channel
Jim’s advice to brands looking to join the Amazon channel

In this episode…

Spangler Candy has been in the business of selling candy for many years and their decision to enter the Amazon marketplace was the logical next step in growing their company. Consumer behavior has evolved through the years and companies need to stay on top of the game in order to remain competitive and relevant — and this includes embracing ecommerce.

Being in charge of ecommerce at Spangler Candy, Jim Knight has had his fair share of challenges. But he managed to push the envelope and drive sales for their company despite the initial hurdles; they now have a strong following in the ecommerce space and he says, there’s a thing or two you can learn from their experience.

Join James Thomson as he interviews Jim Knight of Spangler Candy in this week’s episode of Buy Box Experts where they talk about the growth and evolution of Spangler Candy, how selling on Amazon has impacted the company’s business, how Jim ensures that the company maintains its branding and reputation in the candy industry, and what other businesses who are looking to join Amazon can learn from their experience. Stay tuned.

Resources Mentioned in this episode

Sponsor for this episode

Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.

The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.

Buy Box prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.

Learn more about Buy Box Experts at BuyBoxExperts.com

Episode Transcript

Intro 0:09
Welcome to the Buy Box Experts podcast we bring to light the unique opportunities brands face in today’s e commerce world.

Hi, I’m

James Thomson 0:19
James Thomson, one of the hosts of the Buy Box Experts podcast. I’m a partner with Buy Box Experts and the former business head of the selling on Amazon team at Amazon, as well as the first account manager for the Fulfillment by Amazon program. I’m the co author of the book controlling your brand in the age of Amazon, and co founder of the prosper show one of the largest continuing education conferences for Amazon sellers in North America. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable when you hire buy box experts you received the strategy optimization and marketing performance to succeed on Amazon go to buyboxexperts.com to learn more. Today I’m thrilled to have Jim Knight the VP of e commerce from Spangler candy. Spangler is the company that supplies America’s favorite giveaway candy. For nearly 25 years, Jim has been with Spangler candy, leading marketing and e commerce initiatives to sell bulk candy. In full disclosure to our listeners, Spangler candy and Buy Box Experts work together on Stranglers Amazon channel business today. So welcome, Jim. And thank you for joining us today on the Buy Box Experts podcast.

Jim Knight 1:34
Thanks, James. Thanks for having me.

James Thomson 1:35
Jim, I’d like to start our discussion today by getting your thoughts on how you’ve seen your brand evolve. Its choice of distribution channels over the past 20 years, so as to leverage more of the online channel opportunities.

Jim Knight 1:50
Yeah, sure. Well, just to get a little bit of background, you know, Spangler is a company that’s been around a long time 1906 In fact, We’ve made a lot of different candies over those years. But we are primarily a brand manufacturer that sells at retail retail. So we’re talking through drug mass club, dollar stores, drug stores, those sorts of things. But as I started in Spangler in 1996, kind of when websites and e commerce and everything was taking off, so I actually started in a marketing position, but as kind of a little side project built our first website, Spanglercandy.com in 1996. And then we went online and sold our first product online and early 97. So for e commerce, I mean that’s an eternity in e commerce. That is that is 97. And, and we started out very slow and kind of tested it and I just knew With, with our brands, especially, you know, dum dums being known for giveaway and most people think about them, that a bank or a restaurant or beauty salon, something like that, I knew that, you know, I put together the combination of businesses and our giveaway product and the advent of you know, FedEx and UPS and the delivery model to your house and, and that was my business model right there at the start was both candy businesses, and metal ball candy. We’ve got ups that’ll shift anybody and, you know, in the United States or over all over the world, and I thought it was a great business model. So I kind of started out as a side project, I was really focused on marketing as the first marketing person at Spangler 96, but I always kept that as a side project and it grew and it grew and that’s how we were still a small percentage of our ecommerce sales. Because we really are retail, but it’s growing and becoming more important every day. It’s my job now.

James Thomson 4:08
What are some of the biggest fundamental challenges that online channels like Amazon have created for your company? When you look at the core distribution model you’ve used for decades. Now you’ve got Amazon now you’ve got your own website. Does Amazon create headaches that you you haven’t had to deal with in the past?

Jim Knight 4:28
Yes, they do. And you know, Amazon is a positive thing and its size and it’s grow us some of the issues, problems we’ve encountered. The first one is really just a litany of things. When I was in marketing, I was trying to protect our brand. And then I go on Amazon before we even joined I even as curious I went back and look, you know, we joined Amazon in 2009. On September 2009, I wanted to kind of know and when I was on before we joined and I would search for our product online, you know, I would see our product and I would see wrong descriptions and wrong you see UPC codes, wrong ingredients, wrong flavors, low pricing or, or improper pricing, item proliferation, trademark issues and errors. And we’re a food, you know, candy food products, so it’s ingested. So you know, allergen issues. Do you have the proper allergen statement on your bag? So the first thing I saw was, Wow, I’ve spent, you know, the last 1718 years in marketing trying to protect this brand. And now it’s gotten out there on Amazon and there’s no, there’s no control over it. So that worried me and I thought, I can’t just ignore it. It’s not going to go away. I’ve got to get in and try to control it. And then the second issue so that’s the first issue is brand control. The second issue is pricing. You know, we were selling a very convoluted distribution chain where we sell to distributors and resellers and retailers, and this was, you know, direct from us to Amazon. So it caused issues with pricing and with the sales department and you know, as that pricing range is very wide, it creates opportunity for sales arbitrage, or whatever I call it, right, where you can’t control your pricing. And then a retailer comes and says, I want to carry this this particular bag size at my store, but I found it on Amazon, you know, 20%, lower or whatever. And that was kind of a second, you know, problem that, you know, we’re still working through both of those issues. By the way, they didn’t just we didn’t just fix them immediately. So

James Thomson 6:56
you know, honestly, these are problems that brands will forever forward have to manage. These are not issues that as you say, you can fix one and done and walk away. There is always the potential for someone new to come along and create a listing that’s got incorrect information. There’s always the potential for someone to divert product and sell it at a price that doesn’t align with what you’re trying to do. Are there big changes that your leadership team has had to make in terms of rethinking? How do you do channel management across all channels, when you’ve got these big leaks that the Amazon Marketplace is able to take advantage of?

Jim Knight 7:36
Yeah, we’ve, as a management committee,

we’ve worked with sales. You know, we’ve had to pull together e commerce in sales and marketing those three particular departments and say, you know, we can’t work siloed anymore. We have to work together to solve these issues. And we’ll work on that. Your group your company Buy Box Experts.

A lot of help in that regard.

You’ve directed us to a legal firm that has really helped us with distribution and reseller agreements that we’ve implemented. So we use a couple tools, your expertise and Amazon distribution agreements, understanding pricing, and how we’re going to price things and deciding in our portfolio. This item is going to be ecommerce exclusive or it’s not going to be ecommerce rated, right, and the pricing fits the model.

So I would say that

management maybe wasn’t aware of these issues five years ago, but they are certainly aware of them.

James Thomson 8:46
Yes, yes. Let’s talk about the current COVID crisis. I suspect there’s been a decrease in bulk candy sales during this period as foot traffic to brick and mortar facilities has obviously gone to next to nothing. How has your organization tackled some of these externally driven challenges?

Jim Knight 9:04
Yeah, the virus issue is has been a big issue and has affected us. We do primarily sell bulk candy at to businesses, and all the types of businesses that we sell to when you think of banks and restaurants and beauty salons, hospitals, schools, colleges, retail churches, government, all of my clothes. So it’s had a deep impact on our bulk sales. Our Amazon sales has dropped also, but we were on a really good growth pattern on our side and on Amazon and some other marketplaces, Amazon gears a little bit more toward the family and the consumer size packages for us. So it has dropped but it it hasn’t dropped as much as the bulk sales. So right now we’re trying to, you know, weather it and take it day by day. I think as we get Safe and logical reopening of these businesses in Ohio and all the other 49 states that you know, the business will come back. We’ve got a strong brand, I mean, dum dums were invented in 1924. We bought them in 1953. They’re the number one lollipop and in the nation. So it’s well known brand. It’s quality. It’s made in the United States. And I know when this is over, or you know, much, much better that seemed to be back to normal that our brand you know, will bounce back both retail and online.

James Thomson 10:43
Let’s talk a little bit more Jim about brands. You carry some of your own brands, but you also resell a few brands made by other companies. I’d love to get your thoughts on how important is the brand of candy in your business. When you sell product in bulk, what is The role of branding play in your customers purchase decisions.

Jim Knight 11:04
Yeah, that’s a very good question. And I’ve always been a strong proponent of brand and we own seven brands. I’ll just run through them real quickly so you’re aware of that dum dums safety box not at all a pop. Saying are candy canes get about 50% market share in a market. Circus peanuts are very old and static product. Those are the four that we’ve had for a long time and we’ve just acquired three new brands necco wafers, which you’re probably familiar with sweethearts, conversation hearts, you know the Valentine, General sugar candy, the messages on them and Canada mince which is similar to like an altoid. So we now have, you know, the three that we just acquired from necco we’ve been setting up and and getting him back out to market and so my Focus versus on our brands. Of course, as a manufacturer, we want to sell dum dums to businesses tasty pops mini candy canes to businesses, but I, I saw an opportunity to sell other we have some relationships with some other companies. We have some relationships with a peppermint manufacturer. You know, peppermints are a candy item they’re given away as a breath men are in a restaurant, you know, and, and I thought I didn’t want to be a general line, candy wholesaler or ecommerce retailer and sell everything. I did not want to have 5000 skews. But I wanted to have a very curated portfolio I’ll call it and I wanted all of them to be recognized brand names. And so we’ve got permission from these companies and we sell brand names, you know that you would be familiar with. We just added some Jelly Belly items. We have a good relationship with the Jelly Belly company, and they sell online their site, but we felt that it If we chose items that were bulk, maybe giveaway branded, well known high quality, that they would be, you know, additional sales to our brands, and would not, you know, hurt the sales of our brand.

James Thomson 13:18
How do you in the bulk candy business? How do you create stickiness no pun intended, but how do you create stickiness with your customers where the consumer that might actually be consuming the product may or may not be paying attention to the brand the same way that the your customer the bank or the restaurant buying it might be? How do you think about branding for for your customer versus the end user?

Jim Knight 13:45
That’s a good question. Okay. So like the bank that made it in turn, give it away? Yes to someone that’s coming into their bank facility. There’s there’s a couple ways and there’s a couple things that affect that one is our Our longevity in the candy industry and our reputation. So we have a very strong reputation for financial security stability, great customer service, good quality products, and people in the candy industry and customers in the candy industry know that. So we rely on that he tried to maintain that good reputation. And then in the e commerce world specifically, you know, we try to have a website that is secure, functions very well. Fast. And we add tools that business customers need like a subscription options. We’ve got a subscription option for one month, two month, you know, three months, four months, six months, yes. For any item you want to buy. So that makes very easy want to be easy to do business with. So if you’re a bank manager, a branch manager and you want to buy For your branch, maybe you don’t want to spend your lunch time going out and getting it, you know. And taking that time where you can go online, you can sign up, set it and forget it, we call it check in and the UPS guy delivers it to their door in a couple days. And they’re done. And they have other issues in the banking industry and other independent businesses, they have other issues to worry about that are probably more important than the candy. So they don’t want it to be problematic. They it has to be something. So those are kind of some of the things we do.

James Thomson 15:36
Let me ask you, Jim, during the crisis right now, Are there new things you’ve learned about your customers interaction with your brands that will help you do things in a better way post COVID

Jim Knight 15:50
I don’t know that we’ve learned

I don’t know that we’ve learned any startling thing. You know, that’s brand new to us that we didn’t already know, we know that dum dums does very well in any sort of economic cycle. So if the economic cycle is good dum dums do okay, if the economic cycle is bad. It’s a low cost purchasing it’s a treat for a child. So it still does well. It’s not like a, you know, a heavy consumer item that’s a big purchase. So, in that regard, we don’t fluctuate that much with the economy, which is which is good for us. And, you know, there’s two sides to this, the, you know, virus thing going on right now. There’s the health aspect, and then there’s the economic ads. Yes, yes. Just from the economic aspect. We think we’re going to be you know, okay and in the long term.

James Thomson 16:54
Let’s talk about the Amazon channel for a minute. You’ve been selling on Amazon, you said since 2000. Nine, what has happened to your overall Amazon business as you’ve added Amazon business to two products to the Amazon business platform that the bulk b2b platform? Have you? Have you been able to go after new types of customers or find new ways to sell your product?

Jim Knight 17:19
Yes, it helped. It’s slowly growing. I can’t give you like a percentage of the breakdown between, you know, business or consumer purchases, but it has helped.

And when I say we started in oh nine.

We started in oh nine and then we really didn’t start pushing it aggressively until about 2014. So we kind of coasted we had, you know, limited number of skews on there, just watching it and in 2014 is when I switched out of the marketing department full time to ecommerce full time. And that’s one of the reasons that you know, we decided to take it on. more aggressively. So we started, you know, we started looking at advertising, we started adding skews, we have our own fulfillment center at our factory, which is a huge benefit. So we’re able to do seller fulfilled prime, which has been as big of a growth. For us as the Amazon business, just having to be able to put prime on a lot of your skews and be able to control that. We’re located in Ohio, so we shipped out of Ohio until this year, we finally added a second distribution point in Salt Lake City, which is the perfect city for West Coast distribution. So now we have Ohio really handles the right half of the United States and solid, the left half. And luckily we’ve got two cities there that we can nearly cover the entire United States with just two distribution cities. So all the Issues Amazon businesses, you mentioned seller fulfilled prime to distribution points. All those things. I, I don’t think I’ve had a down month on Amazon maybe until this month

because of the virus. Yes, yes.

James Thomson 19:16
Tell me a little bit more about how do you think about your own website versus the Amazon Marketplace? You know, what, what are what are you trying to accomplish on your own site that might be different than what you’re trying to accomplish specifically on Amazon.

Jim Knight 19:33
On our own site, we’re really trying to focus on all the products you want right there that you may be interested in as a business or you can buy. We do special items. We do mixed candy mixes. The subscription program I mentioned, the ability to call someone on the phone, if you call somebody in our customer service on the phone, they’re going to pick up the phone answer Right, you’re gonna be talking to a live person immediately. So we try to service you know, the Pete in the areas of service, good portfolio selection, good fast website subscriptions

those sorts of things.

And Amazon Of course, you can’t ignore it because they have all the customers out there that you may not and don’t want to come to your site for whatever reason, right? Their Prime member or they dislike Amazon they feel feel at ease with it. You know, we’ll take that sale too. We’ll take all the sale. Yep, yep.

James Thomson 20:42
Jim, over the past few years, I’ve worked with some other confectionery brands and I found that many of them make mistakes around controlling who they retail their products to. And that creates many of these channel control problems we talked about earlier. When you look at brands you’re representing not your own brands, but you’re reselling other people’s brands. How have you aligned yourself with brands that don’t have problems where their products are too widely available for unauthorized sellers to sell at lower than expected prices?

Jim Knight 21:15
So let me make sure I understand that question. Well, you’re saying a brand that we don’t manufacture, but we are selling on our website and yes on and it’s widely available.

James Thomson 21:26
I’m wondering, you know, did you end up with situations where some of those brands are widely available in other places, and you end up with unexpected competitors to deal with online?

Jim Knight 21:36
Yes, it definitely it definitely happens more with the brands that we’ve purchased from other because they may or may not, you know, they may or may not have a distribution policy, they may or may not be trying to control their brand on Amazon at all. So, we research a little bit before we decide to purchase any brands. Or any particular skew for that matter. And we’re very selective in the companies we deal with some of them. You know, we sell some items that are very widely available, and of course, the price pressure on that. Because they’re widely available, the price pressure pushes the price down. And that may not be an item that we decided to stay in for.

James Thomson 22:20
Yes, yes. Let me ask you this. When our Buy Box Experts sales team talks to prospective brand clients, one of the biggest challenges we consistently see is brands lack of awareness that dealing with Amazon requires a different set of skills compared to setting up and running their own shopping cart on their own site. Tell me a little bit about some of your organization’s Hard Knocks, that you’ve had to, you know, endure as you got your Amazon channel up and running. And now finally working well. What what are some of those hard knocks?

Jim Knight 22:54
Oh, boy, I can tell you in the beginning. You know, I was doing everything internally myself. So we call, you know, a whack a mole. It’s a game of whack a mole. We’re trying to keep some of these unauthorized. And there are some good sellers out there. I don’t want to act like they’re all bad, but I’m the good the bad seller saw are trying to correct issues through Brand Registry. You know, I, I worked very hard at it. Correct those issues

for many years.

And that’s kind of the first thing that we learned. We also in the beginning, we were a three P and a one P. We were a hybrid arrangement. And the Commerce Department ran the three P and the sales department ran the one P. and we weren’t talking to each other about what we were doing. So we had two different programs going to Amazon and we may have had an overlap of skews and we finally got together and said I don’t know that the hybrid model is going to work for us long term. It turns out, we ended up going off of one P and just focusing solely on three p, which I think based on the last couple years and what’s been going on with Amazon, I think that was probably a good decision. So those are two of the things, you know, that come to mind immediately of learning. Also, just the metrics for Amazon are so high for deliverability and timeliness 99.5%. You know, sometimes you miss two orders, and you’re below your metrics. And so we’ve had to teach our customer service and our warehouse personnel that every order has to get out by, you know, 2pm, or we’re gonna have an issue. So I would say the aggressive metrics have been a learning curve. So those are probably the first three things that come to mind.

James Thomson 25:00
Great, thank you for those. Jim. I want to wrap up our conversation today by asking you a very, very broad question. When you think of everything you’ve learned, dealing with Amazon, what advice would you give to brands that are that are looking to join Amazon? What advice would you give them around? How to manage Amazon in a way that aligns with all the work they’ve done in their other channels? How do you make Amazon fit in with everything else?

Jim Knight 25:30
Yeah, that’s the secret.

James Thomson 25:33
We can talk for an hour about this particular question, but

Jim Knight 25:37
I’ll try to make the short answer on that one, I would say if you don’t have the time to dedicate it to it internally, as yourself or someone in your department, then outsource it to an expert. Either way you choose if you decide to do it internally or externally. You have to get control of your brand and everything. It relates to your brand. You know, control in the marketplace, how the brand is represented packaging, all the things I mentioned before with UPC codes and descriptions and allergens and ingredients and trademarks, you have to get control of that. And whether you do that internally or using someone, a legal firm, or an agency, like my boss, you have to get out first. And then the second most important thing is pricing. You’ve got to talk to sales and get your pricing and your portfolio line. Yep. So that if you’re selling something to a large retailer out there in the world, it doesn’t. It doesn’t mess up their plans and it doesn’t mess up your Amazon plans. And that’s where we’re kind of at right now is building e commerce exclusive products and getting them separate from some of our retail products. So there’s no comparison and there’s no issues, customers or retailers. Those are kind of the first two things I would say

James Thomson 27:01
very good advice. Jim, I want to thank you for joining us today. For those of you interested in learning more about Jim’s organization, please visit Spangler candy.com.

Jim Knight 27:13
Thank you, James. I also want to just finally put out a note. Thanks for both your books. I’ve read both of them. And they’ve been very, very helpful. So I appreciate that. Thank you, Jim.

Outro 27:26
Thanks for listening to the Buy Box Experts podcast, be sure to click subscribe, check us out on the web, and we’ll see you next time.